Unsuspecting Commercial Building Owners Facing Huge Fines for Outdoor Signs Illegally Installed on Their Buildings without Their Knowledge or Permission
December 4, 2014
Itkowitz PLLC Gets Great Result at Hearing on ECB Violations
The game works like this. Unscrupulous outdoor advertising companies lure New York City “Mom and Pop” bodegas, convenience stores, and delis into allowing them to hang signs on their storefronts. The advertising companies pay the stores “rent”, and promise to drive potential customers into the establishments by displaying products and promoting sweepstakes.
But the advertising companies often hang the signs illegally and without permits. Then, the City swoops in and slaps violations and expensive fines on not only the advertising companies, but on the stores and their landlords. When the advertising companies cut deals with the City or go out of business, and when the small stores lack the funds to pay the fines and go out of business, then the building owners are left dealing with the fines. The violations and fines come as a shock to many commercial landlords, because they were not even aware that their tenants were allowing advertising companies to hang signs on their storefronts. Frequently, neither the advertising company nor the tenant asks the building owner for permission for these deals.
In the case we write about today, between 2010 and 2013, a company known as Contest Promotions NY, LLC (“Contest Promotions”) entered into several one page contracts with a store known as 149 Church Associates Fruit Corp. (“the Store”) at 149 Church Street in Manhattan, a typical neighborhood grocery store. The contracts allowed Contest Promotions to hang an outdoor advertising sign outside the Store, right above a busy subway entrance. One of the signs sported a colorful ad for “Red Bull”.
In August 2012, the City issued 9 violations regarding the sign: 3 against Contest Promotions; 3 against the Store; and 3 against the building’s owner, 149 Church Associates, LLC (“the 149 Owner”), who had no idea the sign had even been hung.
The 149 Owner hired Itkowitz PLLC, to represent both the 149 Owner and the Store before the Environmental Control Board (“ECB”) at the hearings on the six violations. The potential liability of the Store and the 149 Owner was $40,000.00 each, or $80,000.00 in total.
While it is notoriously difficult to prevail at the ECB, we did extensive research and preparation and found some great defenses, and were able to have four of the violations dismissed, mitigated the remaining two, and only $10,000.00 in fines were assessed.
The ECB has often held that the presence of an outdoor advertising sign on a building created the reasonable inference that owner either directly or indirectly made space available on signs erected on its building for advertising purposes as part of the regular course of its business. The ECB has also held that unless a sign was exhibited for a brief time, a building owner who does nothing more than accept rent from an outdoor advertising company is, nevertheless, engaging in the outdoor advertising business indirectly.
But in all these and other decisions sustaining Notices of Violation (“NOVs”) related to outdoor advertising signs, the property owner had engaged in a voluntary act, either by directly procuring an outdoor advertising sign for its building, or by entering into a lease with a third party to do so, or because it was aware that a tenant had entered such lease and allowed it to continue.
Here in our case, the Judge found that the 149 Owner did not so act, nor did it have any role in or knowledge of its tenant’s action. Our client’s main witness, the property manager, testified that he thought the sign was hung by the MTA, because it was hanging at the entry to the subway. The Judge found this testimony reasonable. It was conceivable that the 149 Owner should believe the cited sign was an MTA sign, given its unusual location above the subway stairs. Thus, the Judge found that the 149 Owner did not engage in the outdoor advertising business, and the violations against 149 Owner were dismissed. The violations against the Store were mitigated because we proved that the illegal sign was taken down prior to the date of the first hearing. Thus $80,000.00 in potential liability was kept to $10,000.00.
